How is compensation calculated for permanent disability?

What the Law Says

The Employees’ Compensation Act, 1923 governs compensation for work-related permanent disability. It prescribes a structured formula based on wage, age, and percentage of disability.

Compensation for permanent total disability is fixed at 60% of the monthly wage multiplied by a factor from Schedule I of the Act, which varies with the worker’s age at the time of injury.

For permanent partial disability, compensation is proportionally reduced — e.g., 40% loss of earning capacity entitles the worker to 40% of the amount payable for total disability.

The monthly wage is capped at ₹15,000 for calculation purposes (as amended in 2017), even if actual wages are higher.

A claim must be filed within 30 days of the accident or onset of disability, though late claims may be accepted with sufficient cause.

Statutory Text

In the case of permanent total disablement, the employer shall pay to the employee an amount equal to 60 per cent of the monthly wages of the injured employee multiplied by the relevant factor specified in Schedule I.

— Employees’ Compensation Act, 1923, s. 4(1)(a) — Compensation for injury resulting in permanent total disablement

Statutory Text

Where the injury results in permanent partial disablement, the amount of compensation shall be such percentage of the compensation payable in the case of permanent total disablement as is the percentage of the loss of earning capacity caused by the injury.

— Employees’ Compensation Act, 1923, s. 4(1)(b) — Compensation for injury resulting in permanent partial disablement

Sources